Intel and friends in $3.5bn tech stimulation

Self-proclaimed heroes of the IT people

At a speech delivered at the Brookings Institution in Washington, DC, this morning, Intel's president and chief executive officer Paul Otellini said that the chip maker was spearheading a $3.5bn investment by itself and venture and established tech companies to cultivate new tech companies and thereby create jobs.

Otellini's speech, entitled Reinventing America's Economic Future: Fostering Industries of the 21st Century - available here (video) or here (transcript) - follows a year after Otellini visited the US capital and announced that Intel would be spending $7bn to upgrade its wafer bakers in the United States during the hottest moments of the economic meltdown.

"You will recall, of course, that when I made that announcement, the US economy was facing one of the greatest crises in our history," Otellini said in the opening of the speech. "I called it the worst economy I had seen in my 35 years at Intel. Yet I believed that our investment was both good for our company and our country. It was a way to increase our commitment to innovation and future competitiveness.

As it turned out, America and the world avoided the worst-case economic scenarios. But we're not out of the woods, and I'm concerned that we are not taking all of the right steps as a nation to ensure that our economy is on a long-term trajectory of growth and leadership. The United States faces a world with much tougher competitors - many of them are accelerating their investment in the future faster than we are."

The tone of the speech seems to suggest a kind of altruism - as if venture funding companies or tech giants - never did anything that didn't suit their own needs, in the short, medium, or long terms. This is nonsense.

Intel spent that $7bn to facilitate the production of new generations of microprocessors, which have helped convince many IT shops and consumers to spend money despite the weak economy because a computer is a necessity, not a luxury. So investing in wafer bakers was not exactly a risky bet on the part of Intel last year. And neither is making investments in startup tech companies and helping to foster jobs. Nonetheless, Otellini - like his predecessors at Intel and his peers, past and present, at other IT giants - laments that there are not enough tech experts in the United States even as jobs are outsourced to other countries and employees are brought in on visas.

Otellini said that Intel has two factories in Oregon running the 32 nanometer processes its most advanced processors use and that factories in Arizona and New Mexico will come online with the new technology that $7bn bought later this year. The plants have 7,000 full-time employees and 4,000 contract workers, and the implication is that the upgrade protected those jobs this year and last year - something Intel did out of the kindness of its red-white-and blue heart.

Another implication in Otellini's speech was clear: Intel invests in the future. Uncle Sam, well, not so much. "What is true for companies is also true for countries," lectured Otellini. "Global competitiveness requires continually making investments for the future. Investments in things that make innovation possible, even if they don't yield results immediately.

Unfortunately, long-term investments in education, research, digital technology, and human capital have been steadily declining in the US. So too has the commitment to policies that made us such an entrepreneurial powerhouse for more than a century. This is the bitter truth, and we don't hear enough about it."

Other countries crank out more math, science, and engineering students, and the powerhouses of India and China as well as Finland, Korea, Japan, and the Netherlands were singled out by Otellini as countries that have national policies for digital infrastructure and sustainable energy.

Intel and its friends in the Invest in America Alliance want to start pushing the United States toward a more coherent digital and energy-efficient future, and they're willing to pump $3.5bn into startups over the next two years. (Again, like they weren't going to try to make money in tech in the first place by investing in startups). Intel's 24 VC partners are a who's who of venture capital, as you would expect, and Intel is kicking in $200m into the Invest in America Technology Fund.

The second prong of attack by the alliance involves Intel and 16 other tech companies - including Accenture, Adobe, Cisco Systems, Dell, eBay, EMC, Google, Hewlett-Packard, Microsoft, and Yahoo - to increase their hiring of college graduates this year. In some cases, these companies are doubling up their hiring and collectively want to create an additional 10,500 new tech jobs before graduation this summer. Every little bit helps, of course, but this seems to be a very small drop in a very big bucket considering the millions of lost jobs the US has sustained in the past year and the fact that it needs to add millions of jobs per year just to keep pace with population growth.

If conditions don't change, we'll just have to start sharing our PCs and servers in the United States on a vast scale and get by with fewer upgrades. That's the real horror Intel is worried about.

The bitter truth, which we don't speak of often enough, is that like every other properly amoral capitalistic IT vendor, if Intel could shift everyone but the top brass overseas where labor laws are looser and the pay is lower and not face political wrath, it damned well would. Intel, like every one of these IT giants, waves many flags, not just Old Glory. And in the end, this is not really about America or flag-waving but about making money globally, and all the tech giants have their politicians and their countries lined up as suits them best most of the time. ®